Tinubu Approves N2.8tn for GenCos, Rejects N6tn Electricity Subsidy Claim
- President Tinubu has approved N2.8 trillion as verified electricity subsidy debt owed to GenCos
- The President reportedly rejected the operators’ N6 trillion claim after a government audit
- The president said payments will be made in phases, with half expected to be settled by mid-year
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
President Bola Tinubu has approved the payment of N2.8 trillion to power generation companies (GenCos) as the federal government’s audited liability for accumulated electricity subsidies dating back to 2010.
Source: UGC
However, the President rejected the N6 trillion claim submitted by the operators, insisting that the government would not pay beyond the audited figure, according to senior officials in the Presidency and the Federal Ministry of Power, The PUNCH reported.
Audit cuts claim from N6tn to N2.8tn
The approval followed months of negotiations and a tripartite audit involving the Ministry of Finance, the Nigerian Bulk Electricity Trading Plc (NBET), and the generation companies.
Sources said the GenCos had initially presented claims ranging from N4 trillion to N6.6 trillion. The higher figure was recently disclosed by the Chief Executive Officer of the Association of Power Generation Companies, Dr Joy Ogaji, who warned in a television interview that the debt was increasing by about N200 billion monthly.
Presidency officials said Tinubu directed that the claims be subjected to a detailed audit before any public funds were released. After the review, the verified liability was put at N2.8 trillion, which the President has now approved.
According to one official, Tinubu made it clear that the federal government would only accept responsibility for the audited amount and “will not pay one naira more” than the figure confirmed through the process.
N501bn bond already disbursed
As part of efforts to demonstrate commitment while negotiations were ongoing, the government in January raised N501 billion through a bond issued under the Presidential Power Sector Debt Reduction Programme. The bond was reportedly fully subscribed by pension funds, banks and asset managers.
Officials explained that the initial disbursement was made as a show of good faith pending the conclusion of the audit. With the final liability now determined at N2.8 trillion, further payments are expected to follow in phases.
A senior power ministry source disclosed that between May and July, the government plans to release an additional N600 billion to N800 billion. This would bring total payments to roughly half of the approved liability by mid-year, while the balance would be settled over 12 to 24 months.
Source: Getty Images
Conditions attached to payment
Presidency sources said the approval comes with strict conditions. A significant portion of the funds will be ring-fenced for the settlement of GenCos’ outstanding debts to gas suppliers.
Officials noted that unpaid gas bills have been a major factor behind recurring power shortages and grid instability, as gas suppliers often suspend deliveries when invoices remain unsettled.
Under the arrangement, GenCos will be required to allocate a specified percentage of the N2.8 trillion to clear gas debts. The government also plans to mandate that part of the funds be invested in infrastructure renewal and expansion, with proof of compliance.
One official alleged that audits revealed patterns of underinvestment by some operators, claiming that revenue collected was not adequately reinvested in maintaining and upgrading facilities.
NLC tackles GenCos, FG over electricity crisis
Legit.ng earlier reported that the Nigeria Labour Congress (NLC) which recently opposed large-scale payments to GenCos and questioned the value delivered since privatisation.
The NLC, which criticised both GenCos and the federal government, threatened to embark on nationwide industrial action over the recurring collapse of Nigeria’s electricity grid, criticising more than a decade of power sector privatisation.
The labour union argued that the current electricity output reflects stagnation in the power sector and called for a comprehensive review of the power industry.
Source: Legit.ng
